Unilever's Strategic Direction and Corporate Success: Influence of External and Internal Factors
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1. Introduction -Unilever's Strategic Factors for Corporate Success
The key to run a successful business and maintaining the growth rate for the long term is making a business strategy. It is a long-term plan that can bring the desired future state for a company. A proper strategy and its implementation directly show positive or negative effects on the profit margin of any company, regardless of the size and business type, this works to achieve future goals and helps to act according to the plan to make a profit. How a proper implementation of strategy helps to grow, can be observed in the growth rate of UK-based food manufacturing company Unilever. The study aims to discuss the strategic direction of this organization. The influence of external, internal, and competitive factors and how they affect in implementation of a proper strategy and help to develop future strategies will be discussed.
1.1 Background of the company and industry analysis
Unilever is considered one of the most renowned companies that have a b impact on the world’s business market. It is mainly a food manufacturing company that expanded its service to home care and personal care products too. In the list of the top business companies that have played the role of game-changer for the UK, Unilever tops the list. From the very beginning to now, they are focused on just two points that make them stand out from the crowd, innovation and a purpose that eventually helps them in shaping the future.
It has spread its business over more than 170 nations and runs almost 4 different types of business segments which help them in making a b financial set up. The financial growth of any company depends on its sales, revenue, profit, stock market, and moreover shares prices and for Unilever, all those components are perfectly balanced to reflect the growth. That is the reason; Unilever stands tall in the list of “World’s Leading 50 FMCG companies”, based on its net sales.
The success rate of any company, especially business heads such as Unilever, runs via implementing a steady strategy that can work for achieving goals. From the beginning era, it has followed a strategy that worked for them, after a certain period of time they bring a bold strategically change in the form of refocusing (Statista, 2022). They shifted their focus to core products that have a b market and potential at the same time, which has successfully shown its effects by 1989. Since then they have focused on maintaining a sustainable business strategy that can shape their future business model for them.
3. Interrelationship of corporate strategy and corporate success
3.1 Unilever and its impact on corporate success: mission, vision and strategy
Unilever is one of the renowned FMCG organizations operating in the UK market under Alan Jope. Corporate mission along with vision and strategy influence the strategic initiatives undertaken by the organization for directing corporate success. The ideal mission and vision of the company ensure the corporate growth and future success of the organization. The corporate mission of the organization focuses on adding value to the life of the consumers through the provision of quality services (Sharma et al. 2020). The company successfully meets the nutrition, personal care, and high expectations of the customer through the provision of a wide range of nutritional and personal care products.
Increased emphasis on the provision of quality services to the consumers accelerates business growth and revenue generation of the organization (Ilmudeen & Bao, 2020). According to a recent financial report, Unilever has been reported to earn total revenue of nearly 10460 million euros and 10572 million euros in home care products in 2020 and 2021 respectively. Furthermore, the company has earned revenue of 19287 million euros and 19971 million euros in food and refreshment products in 2020 and 2021 thereby indicating a positive influence on organizational mission and corporate success.
The organization follows the vision of making “sustainable living commonplace”. Unilever focuses on becoming the global leader in sustainable business. The sustainability report of Unilever highlighted a nearly 64% reduction in Scope 1 and 2 GHG emissions since 2015. Corporate social responsibility (CSR) aspects of the organization focus on reducing environmental impact. Nearly 53% of plastic packaging is recyclable and reusable. Furthermore, the organization aims to reduce 50% of virgin plastic usage and 100% recyclable plastic packaging by 2025 (Berente et al. 2019). Thus the particular vision of the company helps its growth and meets the customer satisfaction rate. It helps the company to sustain its global presence as well as maintain a b position in the company's competitive ambiance.
Unilever follows the marketing strategy of “brand with a purpose”. It is one of the effective marketing strategies that help its customers to attract customers to them. The organization’s corporate initiatives include a product development portfolio. The organization is committed to developing sustainable food (Gerasimov, Vasyaycheva & Gerasimov, 2018). The future food initiative of Unilever emphasizes shifting consumers towards healthy diets. Unilever focuses on encouraging its consumer to shift to the consumption of a plant-based diet thereby reducing its carbon footprint by 35%. The organization has further led emphasis on innovation strategies for gaining competitive benefit. The brand relies upon advanced technology for delivering superior quality products while improving planet and community members' wellbeing.
3.2 Influence of external, internal, and competitive factors
3.2.1 Impact of an external factor (PESTLE)
Table 1: “PESTEL Analysis”
Factors
Description
Impact
Political factors
? Political condition of the UK can be defined as stable ? The index of stability is 0.47 points (Theglobaleconomy, 2022) ? Political violence and terrorism are barely found
Positive
Economic factors
? Economical freedom score is 72.7 (Heritage, 2022) ? Among 45 countries UK holds the 17th position ? Pandemic such as covid-19 affects the economy ? Brexit also have negative impact
Negative
Social factors
? Current population of UK 68,600,728 as per July 6, 2022 ? 40.5 is the mean age (Worldometers, 2022)
Positive
Technological factors
? The ranking based on innovation index is 4 ((Wipo. int, 2022)) ? It is the best place for financial and technological institutions. ? Great opportunities available for “technology incorporation job”
Positive
Environmental factors
? The Forest Act, 1980 ? The Air act, 1981
Positive
Legal factors
? Employment Rights Act, 1996 ? Simplification of global employment
Positive
The stable political condition and the absence of any kind of violence or terrorist activity, is considered as the main positive point for running a successful business (Ortega et al. 2019). Every political and economic factor that works for a business is present in the system of the UK, and it reflects on the growth of Unilever too. As the stability index of the UK is 0.47 that means the government has more time to focus on the growth of the business (Unilever, 2022). It affects the process of making a steady strategy that can be implemented for making a good profit margin, these factors matter the most. It can be clearly seen in the case of Unilever, as a part of the strategy they have been focusing on accelerating the growth of the UK, and invested more to strengthen the overall market (Heritage, 2022). The Economical freedom score of the UK is 72.7, and as a result of the post-pandemic scenario, it directly affects the financial growth, especially for Unilever, because it is in the food manufacturing field. As a result of it, Unilever also makes strategies to develop health conditions by maintaining proper hygiene and plant-based food items that can help them to sustain in this situation.
The current population of the UK is over 68,6 million and the mean age is 40.5 (Worldometers, 2022). It gives the most positive advantage to Unilever and its strategy-making process because it gives them the needed opportunity to choose the ultimate talent from a huge amount of people, which helps in developing their financial growth (Pan, Chen & Zhan 2019). Most of the population is tech-savvy, which works great for the overall growth of the UK because it gives the financial and technological institutions to grow faster (Wipo, 2022). It helped a lot in making strategies for Unilever because then has the opportunity to imply new technologies that can help them in making further progress to grow. In cooperation of technology always worked for Unilever and shows its result in the profit-making graph.
Every company, especially companies like Unilever, makes their strategies keeping the core factors as the key (Worldometers, 2022). In that case, the core factors are the environment and the most important part of the whole system, its employees. Unilever sets its priority to save the environment and for that purpose, every implemented strategy of them focuses on the two important laws, such as “The Forest Act, 1980” and “The Air act, 1981”. The other core component that Unilever keeps in mind in the time of making strategies is its employees (Theglobaleconomy, 2022). From the starting time, it prioritizes the employee needs that are the reason it maintains a b internal balance which eventually helps them to grow productivity. Employee-related acts such as “The Employment Rights Act, 1996” and “The simplification of global employment” are the laws that save the employee’s interest in the highest possible way.
3.2.2 Impact of internal factors (SWOT)
Table 2: SWOT analysis
Strength
Weakness
? b brand value because of its worldwide business (Unilever, 2022) ? Product range ? Innovative product ideas ? Combination of global thinking and local execution
? b global competitors ? Replaceable products
Opportunities
Threats
? Diverse consumer base and globalization creates opportunities ? Health-conscious consumer and product range ? Good track record based on social and environmental responsibility
? Global economic crisis ? Pandemic ? Increasing small food manufacturing companies
Unilever is fulfilling the consumer need and making their stand b in the global business market that eventually helped them in growing the business in a steady manner. Among the strengths that worked for Unilever since its beginning, brand value is the most important one. As they operate the business in nearly 190 countries in the whole world for decades, it creates a b brand value that easily influenced the consumer in the global market. The product range, which is considered among the base of Unilever, is also a works as strength for them because the more they offer; the more base will get b, which will eventually hold the business. Not only have that, but the product ideas are at the same timed unique and innovative which attracts the customers. The main idea that runs in the veins of Unilever is they believe in bringing global thinking to the local execution level.
Global Companies such as P&G are also available in the market which is the reason why it is tough to sustain in the same market for Unilever because they are raising the level of competition and challenges (Benzaghta et al. 2021). Moreover, the products of Unilever are easily replaceable because of the availability of alternative products in the global and local markets.
Globalization has worked as an opportunity for Unilever, because of its diverse consumer base, which makes them sustainable in the market. As being in the food manufacturing business, the most positive thing that creates an opportunity for Unilever is the rise of a health-conscious consumer base. The track record of the company has done the most effective part in creating the opportunity.
In the post-pandemic situation where everything was put at risk, Unilever faces major threats too (Unilever, 2022). As being in the food manufacturing business where Covid-19 creates instability in the market, it affects the profit margin too. Without that, the globalization and increasing number of local and small food manufacturers also became a threat to Unilever. After facing challenges in the global market, and immeasurable threats, Unilever still manages to grow with the help of its b consumer base and track record.
3.2.3 Influence of competitive factors (five forces)
There are major external factors that can impact regardless of the size of any kind of business. Five forces that lead the business graph of Unilever, such as
“Competitive rivalry” (b): “Competitive rivalry” works as the best force for Unilever. There are firms or giant companies that are increasing the challenges for Unilever, such as P&G and Associated British Foods. They too are operating the same food manufacturing business and aggressive competitiveness creates a b force for the company. That is the reason they prioritize this in the marketing environment.
“Bargaining power of buyers” (b): As there are too many options for the same kind of products made by Unilever, consumers have the power to bargain more (Bruijl et al. 2018). It will take no time to switch the products with properly available alternatives. As a result, it works as the best force for Unilever that affects the business. The major availability of products gives the consumers chances to alter the products of Unilever easily.
“Bargaining power of suppliers” (Weak): The bargaining power of suppliers works as the weak force factor because of the situation of the market. As the availability of suppliers in the market is huge, it creates advantages for Unilever, they have options to replace the supplier anytime they want (Unilever, 2022). There are a lot of suppliers that want to work with such a giant firm as Unilever. That is the reason it is a significant factor but affects Unilever less.
“Threat of substitution” (Weak): The threat of substitution works as a less factor for Unilever because to replace a company like Unilever the company needs a lot of capital investment, which is a major challenge for anyone. Most importantly, as Unilever maintains its hygiene level it helps them to maintain the trust of the consumers (Unilever, 2022). After the covid-19 situation, the consumer has shifted their priority to maintaining hygiene and that made them rely on their trusted manufacturing company. That is the reason it is too significant but affect less trustworthy brand like Unilever.
“Threat of new entries” (Weak): In a competitive market such as food manufacturing, to start a business needs a lot more capital, which is hard to manage for any small capital-based company. It creates a great opportunity for giant companies like Unilever, the less the competition, the less they need to be worried about (Ortega et al. 2019). That is the reason it works as the weakest force for Unilever.
3.3 Business environment and competition: anticipated changes and their impact
Corporate success and organizational progression are largely affected by the business environment. Uncertainties along with challenges within external ambiance threaten the successful conduction of the corporate activities. Dynamic market ambiance along with changing market price, variable tastes of the customers, and economic situation collaboratively affect the overall business success (Wu et al. 2021). Thus it is highly essential for the corporate sector to conduct market research and implement innovative approaches for contributing to organizational success in the long run. Furthermore, it is of significant importance for the organization to conduct competitor analysis to analyze the competitor's performance. Implementation of such strategies can help organizations gain a competitive advantage in the future market.
Economic shifts can be one of the major factors that may affect a company's future growth and development. As opined by Uzir et al (2020), the economic market generally changes and several factors like recession, depression, and time of prosperity influence the overall business ambiance. Economic stagnation within the UK enhances the chances of recession. Reduced economic growth along with increasing price rises in the UK further pose a serious threat to organizational progression.
GDP growth rate contributes to organizational success by contributing toward increased sales volume. However, as per the recent report, the GDP of the country has fallen by 0.3% thereby indicating the crisis that might affect overall organizational progression. Slow GDP growth threatens to down regulate organizational progression. However, in such scenarios, Unilever may focus on freezing recruitment, availing cost-effective material, maintaining a limitation in the product qualities and pursuing effective credit lines to fight against the economic downturns.
Social norms can be the other major factor that can affect the overall business ambiance. The political and social interests of the people change from time to time.
Business is largely driven by the cultural belief of the consumers. Diffusion, acculturation and transculturation result in changing the cultural beliefs of the consumers thereby further impacting consumer preferences. Increased of globalization and migration results in the intermingling of individuals from different cultures thereby broadening cultural shifts. The immigration rate has risen from 604 in 2018 to 741 in 2021. Acculturation or intermingling of cultures results in changing cultural attitudes among the individuals thereby impacting customers' buying behavior (Mohmmed et al. 2020). In context to Unilever, change in social and cultural norms might compel organizations to opt for selling more vegan items within its inventory.
Technological developments may also influence the future marketing ambiance. The technological growth and advancement in today's world effectively influence the overall business ambiance.
According to a recent report in the context of technological investment, nearly 93.5 billion U.S. dollars are being invested by organizations thereby indicating the intense impact of technology integration within business operations. In order to sustain in the future market, it is highly essential for Unilever to focus on the integration of Ai and machine learning within its corporate operation for stimulating organizational success. Usage of AI within the business process facilitates organizational progression (Carless, 2019). Corporate sectors should focus on business automation procedures for improved organizational productivity.
The changes in laws and regulations also affect the business environment. Organizations are required to conduct its business operations by abiding by the laws. Failure to abide by the federal rules and regulations by an organization can result in fines thereby threatening the organization's operation. It is highly essential for Unilever to focus more on enhancing its adaptability aspects to gain competitive benefits. Market trends also affect the business and marketing strategy of the company. The taste and trends of the customers change over time. Thus the organization must conduct market research to keep track of consumer requirements. In the case of Unilever, the company should focus on increasing its product value to successfully maintain the customer satisfaction rate.
The marketing strategy of the company is very significant as it allows the company to maintain its current reputation and evaluate future development changes. The successful marketing strategy of the company helps it to gain more revenue in the future. Globalization along with recent technological development has resulted in increased competition. Thus the organization must conduct competitor analysis to gain an understanding of the market knowledge. Detailed competitor information further help Unilever to formulate its marketing mix strategies for the fulfillment of organizational goals
3.4 Analysis of past strategic choices and proposed action plan
Strategic choices are very important to the company to maintain its global presence and sustain customer satisfaction rate. The company maintains its competitive positioning by implementing effective business strategies. Several instances of the strategic approach undertaken by Unilever highlighted the “Unilever sustainable living plan”. It served very important as it allowed the company to set commitments and targets that accomplished many goals (Buergin et al. 2018). Thus strategies were very helpful in successfully improving the overall well-being of the consumers. Unilever focused on improving and enhancing their products to offer a more standard lifestyle to their customers.
CSR aspects of the organization make it highly crucial for the organization to focus on the well-being of the customer, community, and planet. Increased dependency on a sustainable business approach has accelerated business growth and revenue generation of the organization over the last years. Market share along with organizational profitability has greatly accelerated since previous years due to improved market initiatives.
Unilever's past marketing strategies emphasized on "personal care portfolio". The acquisition of several brands like Nexxus, TRESemmé, Alberto VO5 with Unilever has resulted in attracting more consumers to the company. The strategy in the personal portfolio has successfully gained popularity and the company is also committed to speeding its global presence. The personal care products of the company served with integrity and authenticity which successfully attained the trust of the customers. Furthermore, the company mainly focused on three goals to be achieved by 2020. These goals were to improve the overall health of "one billion people", to improve the lifestyle of the individual, and to maintain an environmental footprint of group products. This particular plan is the fruit of ten years of dedicated work by the company. In 2009, it established a vision of doubling its size. "The sustainable living plan", which was introduced one year later, anticipated the way that the aim will be accomplished. In 2010, Unilever took initiative to evaluate its action plans. It was found that near about 1600 products (representing 70% of sales) were successfully assessed.
The organization has further introduced the latest agricultural code resulting in the introduction of nearly 250 factories for reducing waste, energy, and water use. Each brand of the company is responsible for achieving the desired target and the executive team of Unilever measured its success through the overall plan. This particular initiative has an outstanding sweep and it positively impacted the supply chain of the company including suppliers and consumers. In 2014, 14 billion euro brands successfully boosted the business growth of the company. In 2012, Unilever successfully increased its revenue growth to €50 billion, in all categories and regions which contributed to its overall business growth. Furthermore, in 2021 the company possessed 14 brands each of which generated nearly €1 billion annually. It indicates the successful implementation of their effective business strategies to generate more revenues. According to the report in 2012, progress to USLP targets has been reported. The company reached nearly 224 million people with many programs to decrease much disease and spread awareness about the use of soap, and the necessity of “safe drinking water”. The company also promoted oral health. It created a general awareness among the people towards the brand vans activities of the company and they were also attracted to the products of the company.
Action plan
Table 2: Action Plan in context to Unilever
Unilever: Corporate success strategy
Business objective
To become a leading sustainable organization
To enhance corporate productivity through quality service provision
Stakeholders
CEO of the organization, Consumers, Employees, Government
Marketing mix
Product mix: Improved product quality and provision of a diverse range of products
Price mix: competitive pricing strategies and discount pricing strategies to meet consumer needs.
Place mix: Availability of a diverse range of products to all local stores and easy accessibility by consumers.
Promotion mix: Utilization of social media for promoting products
Resources
Human, technological and financial resources
Competitors
Tesco, Procter & Gamble, Marks, and Spencers, Sainsbury
Marketing strategies
Utilize corporate resources in a sustainable manner for gaining a competitive advantage.
(Source: Unilever, 2022)
4. Recommendations and Conclusion
It is highly essential for the organization to implement unique approaches for gaining corporate success.
Integrating corporate strategies with CSR aspect: CSR aspect is a very important business model that helps the company to be more socially accountable to society and the stakeholders. Unilever should follow the CSR aspect to receive a good impression from the customers and to maintain its corporate revenue. Following the CSR aspect will positively impact the stakeholders and products of the company (Carless, 2019). If Unilever follows a b CSR then the chances of sustainability and future growth of the company will be assured and the company can get a positive response from the consumers.
Technological integration with organizational operational activities: Technological investment is very essential to the company. Unilever should also implement new and advanced technology to increase the value of the product and to increase the features of the products. Digital transformation is a significant driving force behind the long-term success and growth of the company (Buergin et al. 2018). It will help the company to regulate its production in a more easy and convenient way. By the use of modern technology, the company will effectively understand the choices and preferences of the costumes and bring innovation to the supply chain.
Investment of corporate resources in analyzing consumer taste and preferences: In the recent modernized era, the taste and demands of the people are rapidly changing. Unilever analyzes the needs and demands of the customers to grasp more customers. The company can also include varieties of products in order to sustain its existing customers.
Unilever is considered the most trustworthy and reliable food manufacturing company that runs the business successfully for decades. From the very beginning to the latest timeline, every kind of situation and challenge that they have faced throughout the journey has been overcome by their steady strategically moves. They act according to the need of the situation. However, in this study, it has been found that every strategy has made two things work as the core component; they are employees' interest and the quality of the product. These strategies ultimately set the steps that helped them in achieving their goal and will work further.
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